The problem with getting older is by the time I learn about a hot new trend, it’s over. That’s where Canada is at with the proposed fast-tracking of LNG plants.
It has never been a good idea environmentally to pour billions into expanding the fracking of fossil gas and then using huge amounts of energy to chill it to a liquid state so it can be exported on tankers. But it is now failing the economic test.
Too much of a bad thing: looming LNG oversupply undermines business case for new projects
Reuters is reporting that Shell and Japanese conglomerate Mitsubishi are exploring sale options for their respective stakes in the $40-billion LNG Canada project. The article notes that Shell (which owns 40 percent of the project) and Mitsubishi (15 percent) may have a tough time getting a good price as “existing and potential owners will consider industry fears of global oversupply of the supercooled fuel, as new LNG output comes online.”
The International Energy Agency is forecasting that the global LNG market is facing a major supply glut after years of scarcity, based on the number of projects that are already under construction. This would drive down prices and thus is bad news for the backers of projects still in the pre-construction stage, like the Ksi Lisims and LNG Canada Phase 2 projects that Mark Carney wants to fast track.
Rapid growth in renewable undercuts future demand for fossil gas
LNG promoters want us to believe that the only choice is between coal and gas, with gas as the lesser of the two evils. But thanks to breathtakingly fast drops in the cost of wind turbines, solar panels and batteries, we don’t have to be evil. We can meet our energy needs with renewables, which are eating into the market for both coal and gas around the world. The solar boom in Pakistan, for example, resulted in the cancellation of LNG contracts.
Wind and solar provide economic security for energy importers in a world where fossil fuel exports are being used as weapons
Oil and gas imports are expensive and put importers at the mercy of increasingly authoritarian petrostates, as highlighted by the Russian invasion of Ukraine and Trump’s flexing of U.S. military and economic power to aid American oil companies secure access to oil and to markets.
A rapid transition to “electrotech” (locally-generated wind and solar energy powering electric vehicles and heat pumps) makes sense for those concerned with costs and national security – with a side-benefit of fighting climate change.
That’s good news for the planet, but bad news for fossil fuel exporters and war-mongerers.
LNG exports worsen the affordability crisis in exporting countries
Cutting back on LNG exports may be bad for Shell, Exxon and their friends, but it is good for consumers. The whole point of exporting natural gas is to reach markets with a higher price (because they don’t have local supplies of fossil gas). This forces local consumers to bid against foreign consumers. The U.S. Energy Information Agency expects growing LNG exports to be the primary driver of a 33 percent increase in domestic gas prices in 2027.
Now that we have cheaper and cleaner alternatives – expanding fracked gas exports might be good for oil companies and increasingly authoritarian petrostates, but it is bad for affordability, our security and the climate.
